No Recovery for Millennials

by Dave Schuler on April 14, 2014

The editors of the New York Times lament that the economic recovery has left Millennials, Americans aged 25 to 34, behind:

The Federal Reserve, increasingly optimistic about the economy, is dialing back its stimulus efforts. The International Monetary Fund has raised its forecast for growth in the United States. Congress has long since reduced aid to the economy, with many lawmakers, mostly Republicans, adamant that the economy is better off with less government involvement.

The official line is clear: The worst is over, and recovery has given way to expansion.

But that’s not the whole story. Economic gains so far have mostly benefited those at the top of the income and wealth ladder. Worse, future growth is likely to be lopsided, because the foundation for broad prosperity is arguably the weakest it has been since World War II.

Take, for example, Americans age 25 to 34, the leading edge of the so-called millennials, the generation born in the 1980s and 1990s. They are worse off than Gen Xers (born from the mid-1960s to the late-1970s) were at that age and the baby boomers before them by nearly every economic measure — employment, income, student loan indebtedness, mobility, homeownership and other hallmarks of “household formation,” like moving out on their own, getting married and having children.

The solution, obviously, is to tax the young and give the proceeds to the old. It hardly seems like a coincidence that a wave of closings is striking the retail sector and many of the stores closing cater to the young.

I don’t think the young are the only people who’ve been left behind in this recovery. Others include the poor, middle income people, and people who live in the middle of the country. Then there are the long-term unemployed.

In the worst circumstances of all are young, black men.

However, if you’re only concerned about averages, the economy is doing very well.

{ 21 comments… read them below or add one }

... April 14, 2014 at 11:51 am

This “recovery” is exactly what the ruling class wants. More wealth for them, more poverty and unemployment for the rest of us. As you wrote elsewhere this morning:

Now consider the hot-button political issues of the day. Immigration reform that includes normalization and a “path to citizenship”. Increasing the minimum wage. Increasing the number of people with healthcare insurance. Balancing the budget. Ending global warming.r

What the parties are pushing are policies that will crush the middle class and the poor. At some point one has to realize that they can’t be this incredibly stupid, and that it must be intentional.

In other news, those young millennials that went to work for Obama have realized that the real money (and power) lies in political consulting and lobbying. This is a very bad sign that anything will change for the better. Rent-seeking will be the real path to wealth, which means less economic activity for the rest of us.

That linked article is depressing on many levels. Besides lobbying being the chosen path to wealth for many of the younger Obama insiders, it is discouraging that the NYTs is promoting that a better option would be for these people to enter politics as their first job and then never do anything else.

Either way, it’s all down here for the rest of us, while the Obama supporters tell us what a fantastic job he’s doing, and that anyone that questions that greatness is a racist.

... April 14, 2014 at 12:15 pm

It should also be noted that later household formation is a negative feedback loop, economically. Household formation is a nice positive as people go out and buy expensive things to get said households up to speed. The absence of the positive is a definite negative.

A few more bits from the editorial:

Another shocker is that those in the 25-to-34 age group are the best educated cohort in American history, with more than a third having a bachelor’s degree or higher. Education is important. But clearly, education alone does not create jobs and opportunities that lead to prosperity.

That last sentence seems to be a newly discovered fact for the Big Shots at the Times.

Certain sectors of the economy, especially the financial markets, are indeed turning a corner. [emphasis added]

Were they not paying attention the last six years, or are they simply pretending they weren’t paying attention?

But true prosperity is impossible when the productive potential of young adults is being squandered.

And yet, that is exactly what the elites have been trying to achieve for some time now, with the Times cheering them on.

At the other end of the spectrum, many older Americans who lost jobs and assets in the recession also face an uncertain future.

Nothing uncertain about it: the future will be bad for those of us that got crushed in the downturn. Hell, the future was several fucking years ago. The NOW is the new reality.

It’s all a big goddamned bit of theater so that those bastards running the Times can wring their hands and pretend to care before they go off to their fabulous parties where they will meet the fabulous people that are looting the country for their own fabulous benefit.

Tim April 14, 2014 at 2:52 pm

I’m in that ‘older Millennial’ age group, and although I’m doing ok by cohort, I do wonder how I would have been doing if I had been say, 10 years older.

The ‘up side’ for me and a number of my friends is that we’re very reluctant to carry credit card debt (even if our student loan debt is atrocious.)

It’s occurring to me that student loan debt will start being identified as a large drag on the ‘real economy’ as the generation with it will increasingly be expected to buy houses, cars and other goods. It also will negatively affect small business formation, where having a few hundred dollars in bills per month that can’t be discharged through bankruptcy might cause problems.

Dave Schuler April 14, 2014 at 3:05 pm

Student loan debt is an extremely fast-growing form of indebtedness. Add that many of the people who are shouldering the debt are unlikely ever to be able to pay it off and you’ve got a real problem.

Ben Wolf April 14, 2014 at 3:29 pm

Fascinating how Washington sees no downside to writing off an entire generation and the wealth that goes with them. I suspect the D.C. set don’t think about it at all.

PD Shaw April 14, 2014 at 4:05 pm

If you start with the proposition that a college education is the gateway to a higher income, then it becomes difficult for the government to bail-out the better half. Cutting food stamps and unemployment, while at the same time bailing out upper-income students with art degrees?

If you start with the proposition that increasing the number of college degrees is one of the best engines of economic growth and increasing real wages, then it becomes difficult for the government to create programs that distinguish those for whom college education has not helped them.

PD Shaw April 14, 2014 at 4:08 pm

Having finished last month’s Atlantic’s feature article on frats and the colleges that enable their violence, colleges need to be way more accountable.

... April 14, 2014 at 4:39 pm

Tim, be smart. Pay your student loan debt WITH CREDIT CARDS. Pay ahead. Pay with block payments. It will kill you on interest rates but if the bottom falls out for you, you can discharge the debt in bankruptcy. And don’t feel bad about sticking the banks with the bill, as THEY are guaranteed to get bailed out no matter what.

I wish to Hell I had done that.

... April 14, 2014 at 4:42 pm

Ben Wolf: I suspect the D.C. set don’t think about it at all.

You are being far too charitable.

PD Shaw: Cutting food stamps and unemployment, while at the same time bailing out upper-income students with art degrees?

If those fuckers on UEC and SNAP wanted to get bailed out, they should have paid off the right politicians. That’s how it works in the New America. Perhaps they could have paid them off with credit card payments to be discharged in bankruptcy in the near future.

... April 14, 2014 at 4:43 pm

Tim, talk to a bankruptcy attorney ahead of time, and see how you need to space things out so that it doesn’t bite you in the ass later. But I’m sure it can be done, especially if things are going well for you at the moment. Payments spread out over time, over years, will look a lot less suspicious.

Jimbino April 14, 2014 at 5:47 pm

The craziest thing is that healthy, single, childfree, young women (and especially men) voted for socialist Obama.

... April 14, 2014 at 7:27 pm

The big picture from this post and the post on LTUEs is that this recovery is crushing people, and hollowing the country out economically.

And as I noted, as of March we’re still over 3.8 million full-time jobs short of where we were in November 2007. That’s simply a crushing blow, especially almost five years into the recovery.

And even the housing recovery comes with a price, as a great number of the houses are being bought by investors foreign and domestic, pricing families trying to buy homes out of the market, or into neighborhoods they don’t really want to live in. This kind of thing has happened before, and it always leads to bad results for everyone but the rich.

... April 14, 2014 at 7:28 pm

The system is becoming brittle, as are the prospects of many people. They look fine on the surface, but any unexpected stress will break them.

steve April 15, 2014 at 8:26 am

I have to assume when you say tax the young to help the old you are specifically referring to the ACA. (Medicare has been doing that for a long time.) Long term funding for the ACA comes much more from older people. The amount coming from young people is relatively small, while they should receive significant benefits. We know from earlier work that when offered health care insurance through the workplace, that they need to pay for, young people sign up at about the same rate as older workers.

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/30/how-congress-paid-for-obamacare-in-two-charts/

Steve

Dave Schuler April 15, 2014 at 9:14 am

It’s not just that, Steve. Social Security and Medicare are the obvious examples of taxes that the young pay to benefit the old.

But so is sales tax.

PD Shaw April 15, 2014 at 9:40 am

SS & Medicare are forced retirement savings programs; you pay today for tomorrow. The ACA only requires you to pay for one year’s premium. Its very difficult to reform SS & Medicare because so many people have already been forced to buy it. The ACA may be here tomorrow; it may not.

Before the ACA, older people paid approx. $1,000 per month for insurance that was worth that much and young adults paid $100 for insurance that was worth that much. Now young adults are required to pay a higher premium to make it easier for those who vote more and have more wealth. (It also reduces government subsidies)

steve April 15, 2014 at 12:15 pm

PD- You need to balance that off against the benefits received. Medicare is actually seeing some cuts. Many of the benefits of the ACA are going to younger people. Also, most of the funding for the ACA does not come from having younger people pay more. (Your ratios are also much higher than I have seen anywhere else. Current ratios are about 6:1 on an age basis. Under the ACA it goes to 3:1.)

While I understand the sentiments about SS and Medicare, I dont think you have it exactly right. Today’s young will eventually be old. They will also benefit.

Steve

Dave Schuler April 15, 2014 at 12:21 pm

From the standpoint of present consumption that doesn’t make a bit of difference, Steve. What we’re doing is trading present consumption of houses, clothing, etc. for present consumption of healthcare services without producing much in the way of additional healthcare services. At best the services will be distributed differently.

It does make a difference from the standpoint of what economists call “optimum welfare”. Optimum welfare is being reduced.

PD Shaw April 15, 2014 at 12:39 pm

@steve, SS & Medicare are old age insurance; no young person enjoys any benefit from them, until (and if) maturation. ACA is insurance is consumed within 12 mos. — shifting costs to youth was not required.

steve April 15, 2014 at 8:30 pm

PD- As I have noted, it is not clear that the ACA actually shifted costs to the young. When you total up all benefits and costs, it looks to me as though young people probably come out ahead.

Steve

jan April 16, 2014 at 12:05 am

When you total up all benefits and costs, it looks to me as though young people probably come out ahead.

Steve, you’re certainly in the minority who see it that way.

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